Important drafting points with regards your will

Important drafting points with regards your will

This article is one of a set about wills. It provides some important ideas about drafting points in a will which often get neglected.

Here are the pointers:

Your correct name and address

Simple mistakes can cause additional work, worry and expense.  Ensure that you:

·        give your full real names;

·        mention your nickname if many people know you only by it;

·        do not abbreviate a name, like Dick for Richard;

·        if you may have assets in a name which is not your true name, (ladies - like the name of a partner whose name you use for convenience) mention that as “also known as”;

·        if you have the same name as your son or father, make sure it is clear which of you is writing the will!

Correct names and addresses of your beneficiaries

As for your own name, incorrect or confusing descriptions or names can cause untold anguish and expense.  Describe beneficiaries by their relationship to you, their full name and their address, for example: “My niece Annabel Robinson of 44 Acacia Avenue, Upper Downtown, SP56 4QX.”  This will help your executors to contact them easily and immediately.

If you make gifts to a group which may incomplete, like your grandchildren, (there might be more down the track) then the law will only include in that group of all those grandchildren living at the date of your death, (or born within 9 months of your death).  If this is not what you want, you can specify names or provide a cut-off date for their birth or other qualification for membership of your group. Make sure your intention is clear and unambiguous.

Blood is thicker than water

The law provides for any group defined by relationship to include members who are in that group through adoption or who are technically illegitimate.  It is not only that beneficiary who is affected by this rule.  It applies also to any person whose membership of the group relies on adoption or legitimacy of some other person, such as a parent.

Step children and relatives by marriage are not taken as being included in a group. If you want to include your wife’s niece, you will have to say so. Of course, the circumstances of the relationship with you may make it possible for such a person to apply to court for “reasonable provision”.

Which gifts?

For similar reasons, you should also describe your proposed gifts precisely.  Any ambiguous, unclear or vague description will be void.  Make sure you identify which item when you have several of the same basic description, such as cars, horses or antique chairs.

Gifts to executors or trustees

If you wish to leave a gift to your executor or to someone who is a trustee under your will for their own benefit, state that the gift is given to them 'absolutely'. That makes clear that they do not hold the gift as trustee for some other beneficiary.

Gifts to witnesses

A gift to a witness is void.  There is no way around making it happen.  Choose witnesses who are in no way potential beneficiaries.

Use of codicils

Before the days of word processing, it was expensive to change a will.  Lawyers therefore made amendments by one or more codicils.  A codicil is a note of the change, witnessed exactly like a will.  Today, a codicil is rarely used and may confuse your family and executors. Do not use them at any cost – even if it saves you time. Instead, write a new one.

Date of your will and revocation of earlier wills

Every time you make a new will, you automatically make any previous one void.  You do not have to include the eternal words “Last will and testament” to effect this.  It is the law. So, even if you have left wills scattered all over the place, only the latest is valid. The crucial thing here, is to date the will currently and to make sure your executors either know about it, or, better, will find it easily when you die. It follows that you do not need to revoke a former will.  Nonetheless, as a “belt and braces” precaution, most will precedents do provide for this. Note, if you have assets in some other country, then a will made earlier which provides for those assets may not be revoked by a later will which does not.

Beneficiaries who die before you and gifts to charities

It’s part and parcel of life that a beneficiary might die before you do. The gift you have made to the beneficiary will “fail”. If you make no provision for it passing to some other person, then one of three things happens, depending on the wording of your will.  Here are the alternatives:

·        It may be distributed according to the rules on intestacy.

·        It may be a gift to charity.  Charity is strictly defined in law as: the relief of poverty, the advancement of education or religion and other purposes beneficial to the community.

·        gifts to a charity do not necessarily fail even if it become impossible to carry them out. Say you make a gift to a charity whose purpose is to find a cure for stomach cancer.  Now, before you die, a cure is found. Because the gift shows a “general charitable intention” a court will order that the gift shall be used for the benefit of other charitable causes as similar as possible to those you intend.

·        If it is a gift to your child or other descendant, the Wills Act will apply so that the failed gift passes to or among the descendants of your deceased descendant.

How to avoid this problem

There are two ways of doing this:  you can make specific provision for a “gift over”, that is to say a gift to some other person if that fails.  Alternatively, you can simply be aware that a gift might fail and satisfy yourself that the people who will share your residuary estate are those to whom you would like to leave the failed gift anyway. Another alternative is of course to make a new will each year so that it is never out of date.

Second husband / wife?

Even the most generous people cringe at the likelihood of their hard wealth cash being spent by unworthy relatives of their second (or third!) spouse.

Of course even if you only marry once, you partner may marry after your death, in which case your money is inherited by people you have never met.

Similar complications arise when the will make wishes to provide for children of an earlier marriage as well as a current spouse and a newer family.  Sometimes there are just too many people who want a cut of the cake.

First, it is virtually impossible to get it all right - even if you plan to die tomorrow.  You just have to accept that you are doing the best you can.  Here are some ideas which may help:

Owning property abroad

Your executors will need to take out a separate application for a grant of probate in any country in which you have assets.  Of course, moveable assets like jewellery can be treated as belonging where you happen to keep them. Property in respect of which they have taken out a grant does not have to be included in their application for a grant in Australia. But beware other tax angles of repatriation of money and profits.  Obtaining a grant is one thing.  Bringing the family ranch back home to Australia may be quite another!

Validity of foreign will

English law will accept a will as valid made if it was made:

·        in accordance with the law required by the country where it was made; or

·        in accordance with the law required by the country, when the will was made:

-                      where you were living or

-                      where at your death you were domiciled or had your habitual residence or

-                      of which you were a national.

Leave a life interest

Most people think it fair to leave your interest in your home to a long-standing wife/husband or partner. Another option is to leave this person only a ‘life interest’. A life interest is just that: the asset concerned is held in the name of trustees, usually your executors, for the ”tenant for life”.  The trustees have to balance the interests of the life tenant for income and the ultimate beneficiaries for capital.

For example, you could leave a life interest to your spouse or partner, then to others (your children?) only after he / she dies.  You can make a life interest out of any asset - a house, furniture, shares.  But it is most usual to create a life interest because the life tenant needs the income or comfort of it.  The most usual items to leave on trust for life are therefore a house or money or financial instruments like shares which provide an income.

If you leave a life interest in the house in which you both now live, remember to check that your spouse or partner can afford the upkeep. You can leave money outright for this, or rely on the tenant for life having sufficient income, or you can add to the trust of the property, further money or income producing assets.  Of course, the trustees could always sell that house and buy a less expensive one, leaving cash over to run it. You do not have to specify such things.  Your trustees have wide powers if you use a Net Lawman document.

What if he/she marries again?

You can provide for a life interest to terminate on re-marriage, though it is thought to be in bad taste.

Assets which produce no income

If you have a stamp collection or a vintage motorbike, there is little point in leaving it to an older person who will have no income benefit from it but who will pay IHT on its value when they die.

Discretionary trusts

A discretionary trust allows your discretionary trustees to hold property and distribute it according to their understanding of your wishes. Simply put, it is to their discretion. You can write a letter to them and leave it with your will.  In the letter you can explain the principles you would like them to follow. You can even give examples.  Your letter has zero legal implication, however, it is likely that your trustees will take account of your instructions.

How are your debts to be paid?

Unfortunately more often than not, it is likely that as well as assets, you have debts. For example, we may owe tax Inheritance tax.  Most people leave many minor household and other debts too.  Occasionally, far lager debts are incurred, such as a judgement in a legal claim or a business loan.  These are rarely anticipated when the will was made and can seriously disrupt your intentions when you made the will.

You cannot avoid the debts, so the best you can do is to allow for the possibility of their being greater than you might like to envisage. Make sure that the debts are not borne exclusively by a small proportion of your estate, but rather that all beneficiaries share them.  In general, that means making sure that you work on percentages of your estate in preference to large fixed sums.  If you do use large fixed sums, make sure you specify that each is to pay its own share of debts and expenses. Let me be more specific:

The basic law is that unless you state otherwise in your will, inheritance tax in respect of lifetime gifts made less than seven years before you die and inheritance tax on joint or foreign property is borne by the person who receives the property or gift and not by those who inherit your residuary estate, but tax on any other kind of property is borne by those who inherit your residuary estate. If you require it to be otherwise you must say so specifically in your will.

Mortgaged property

The basic rule is that debts secured on property must be paid out of that property unless you say specifically to the contrary in your will. 

Attestation clause

This is the name of the paragraph at the end of a will, usually in time proved words to provide compliance with the Wills Act.

A “side letter”

No document can be relied on in a court of law which is not executed as a will.  However, it is often useful to leave close to your will, an additional letter explaining details of some aspect of your affairs which may assist your executors. This is done most often in connection with the operation of a business, when the will maker can give comments and suggestions relating to staff and management.  However, you are not limited in any way, in what you can say.

Conditional gifts

It is perfectly possible to make a conditional gift - such as a gift to someone on achieving a qualification or some other identifiable target.  Your executors will hold the gift as trustees until the beneficiary either does or does not achieve your target. Net Lawman suggests you provide a time frame and an alternative beneficiary in these circumstances.

Public policy considerations

Conditions which are contrary to public policy may be declared void by a court. An example would be a gift “to my son Darren provided he divorces that awful woman he married”. 

Challenges to your will

It is perfectly possible to provide in your will that your executors may not dispense a gift unless the beneficiary has first undertaken not to challenge the will in court.  Alternatively, and additionally, you can provide that any such gift shall be forfeit if that person challenges your will.

Using the right words

Of course you know by now that “right words” are key in drafting a will.  Wills are unusual documents in that they are probably the very first type of legal documents man ever used.  People must have been arguing about “who gets what” for as long as we have been on earth. As far as Australian law is concerned, there is a vast body of case law, occasionally sprinkled with statutory refinements that regulate how we dispose of our goods when we finally leave this world. This makes the words you use pivotal.

At Net Lawman we pride ourselves on writing documents in plain English.  Our wills are no exception. However, there is no way around the necessity to use terms which have particular legal meanings, like “trustee” or “tenant for life”.  So, while you can add to and delete from our wills, be very careful before you change any words to something you think is simpler!

Reviewing your will